AUD/USD Price Looking to Break 0.72 as Risk-off Tone Intensifies

• While Treasury yields rise, the Australian dollar remains steady against the US Dollar.
• The price of oil rises after Biden announces the release of the Strategic Petroleum Reserve.
• As technicals remain mixed, AUD/USD downside is easing, with the 0.72 level remaining in play.

The AUD/USD price remains on the backfoot as the risk sentiment largely deteriorates and boosts the US dollar in return as a safe-haven asset.

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With Wall Street moving from tech stocks to more cyclical sectors, the risk-sensitive Australian dollar remained relatively unchanged. While the S&P 500 and Dow Jones rose, the high-tech Nasdaq 100 fell. Bond yields continued to rise, causing traders to avoid rally-sensitive stocks. Volatility has returned thanks to the S&P 500 VIX Fear Index.

Following President Biden’s announcement that his administration plans to use the Strategic Petroleum Reserve, crude oil and Brent prices rose. However, prices have declined in the past four weeks due to rumors of the move, suggesting traders have already priced in the event based on the positive response to the news. Department of Energy (DOE) plans to produce 50 million barrels in cooperation with China and non-OPEC countries.

The rate decision in New Zealand, which is the main risk event in the Asia-Pacific region, will be published at 01:00 GMT today. It is expected that the Reserve Bank of New Zealand (RBNZ) will raise its key rate by 25 basis points from 0.50% to 0.75%. The NZD/USD currency pair is down on the previous month, but a 50bp increase or an aggressive rate hike forecast could help the pair rise.

Analysts from stock trading website StockApps.com predict a 6.5% growth rate for Singapore’s third-quarter gross domestic product (GDP). However, PMI numbers for the service and manufacturing sectors will decline, according to Jibun Bank. There will also be comments from Deputy Governor Michelle Bullock of the Reserve Bank of Australia.

AUD/USD price technical analysis: 0.72 looks feeble to hold

The AUD/USD price remains vulnerable around the 0.7200 area. The volume data shows no respite for the bulls, and the probability of breaking the 0.7200 handle is quite high. If the Aussie bears manage to break this level, we may see a test of 0.7150 support ahead of 0.7100.

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On the flip side, if the pair gathers traction, we may see a minor up wave to test the 0.7250 area. However, we have to observe up wave whether it contains the due follow-through momentum or not.

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